Current Marketing Thoughts

Are South America soybean supplies starting to dry up??

Oct 09, 2013

Soybean exports here in the US may soon climb to a NEW record as South American supplies start to dry up. Oil World recently released data that show US exports may advance to 20 million metric tons for the 4th quarter compared with 19.2 million tons during the same time period last year and compared to 14.3 million tons in 2011. The reason for the increase is that Brazil looks as if they have already shipped some 95-97% of their export supplies during the first nine months of their marketing year. What we need to realize is that business had formerly been that of the US. Numbers indicate the US has shipped less than 5.9 million tons of soybeans in the six months through September, this compares with 15.2 million tons last year and 10.4 million tons during the same period in 2011. Where as Brazil’s six-month soybean exports jumped to 39.6 million tons compered to 29 million tons a year ago and 27.9 million tons in 2011. The question is how much more will China need to book between now and mid-February? From mid-Feb forward South America is clearly cheaper and appears to be China's first choice. Several analyst believe China has already secured or booked a large portion of the US soybeans they will need to get them through early-Feb. If your a producer and holding onto your soybeans for higher prices, you are basically betting that China will be coming back into the market in a big sort of way during the next 120-days or that South America is going to experience extreme delays in their early planted soybeans or major production problems due to adverse weather. In my opinion these are bets that certainly have some possibility, I just wouldn't be willing to wager the farmer on either one coming to fruition in a MAJOR way. Meaning, there could be some minor excitement or bullish headlines regarding both bets along the way, but in the end I doubt you will be able to cash in our ticket.